Exhibit 5-1

-Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8a.m. Graphically,the result of the increase in freeway space would be shown bya.m.and 11 p.m.Suppose that the government decides to set the money price of driving on the freeway at zero,but builds more freeways to eliminate the shortage of freeway space at 8

Question

Exhibit 5-1
 
-Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8a.m. Graphically,the result of the increase in freeway space would be shown bya.m.and 11 p.m.Suppose that the government decides to set the money price of driving on the freeway at zero,but builds more freeways to eliminate the shortage of freeway space at 8

Quizplus · Accepted Answer

A rightward shift in the supply of freeway space curve would eliminate the shortage of freeway space at 8 a.m., leading to a lower equilibrium price and an increase in the quantity of freeway space consumed. This would be shown graphically by a shift of the supply curve to the right at 8 a.m., and an upward movement along the demand curve to the new equilibrium point where supply and demand intersect. It would also result in an increase in freeway space at 11 p.m. as shown in the graph.

Exhibit 5-1 -Refer to Exhibit 5-1,which Shows Supply and Demand for Freeway